I want to again emphasize that this information is not to be taken as legal advice. The information in this article and previous ones, are a result of professional classes I have taken and reading on the subject. You should always consult your own legal adviser before taking any action.
The purpose of avoiding probate is to keep your privacy and not to save on federal or state death taxes. Nor does probate avoidance have any effect on your family’s right to inherit, or legal obligations to your creditors.
With that in mind, to help keep your privacy, you may want to consider creating a “Living Trust” which is also called a “Revocable Living Trust.” Lawyers call it an “Inter Vivos Trust.” You have total control while alive and you can end it at any time without legal consequences. Probate courts have no legal authority over property that’s held in trust.
While a Living Trust performs much the same function left through a will, the big difference is that property left through a will must go through probate for all the world to see, while property in a Living Trust can go directly to the inheritors and is kept private.
You can transfer almost any property into a living trust, such as bank accounts, stocks/bonds, cars and real estate, etc. As I stated above, you can change or terminate the trust at any time. There is typically a waiting period before property can be distributed under a will. Not so with a Living Trust. Beneficiaries can receive their inheritance much faster.
Also, a trust is much harder to attack in court. I am currently dealing in a situation where one heir is asking the court to overturn a will. Trusts are rarely challenged in a court. You and your wife can make one combined trust or a single trust. If you or your wife become incapacitated, the successor trustee can manage the property for you without court authorization.
Please keep in mind, a trust requires more work to manage. If you transfer real estate into the trust and want to refinance or borrow against the property you might run into some hassle with the lender. You may have to take the property out to complete your transaction, i.e., loan, and the put it back into the trust. While I don’t believe it is true in North Carolina, some states might have you pay a transfer tax to put the real property into a trust.
So, should you set up a Living Trust? There are too many variables to give a yes or no answer. But there are a few factors to think about before deciding. For example, your age and health. Healthy young people think they have plenty of time to decide. Where do you live? Some states have a low-cost probate procedure while some have expensive probate procedures
The relationship you have with your family and heirs should also be considered. What kind of property do you own? Mostly personal or expensive real estate? Any antiques? If you owe a lot to creditors, you may want your assets to go through probate, to take advantage of the cutoff period creditors have to file a claim against the estate.
I hope I have stimulated your thinking as you plan your future. There is much more that should be considered such as naming a custodian for managing property for minors. Again, you should consult a legal adviser to establish your Living Trust. Yes, you can do it yourself depending on your knowledge. But it wouldn’t hurt to have a lawyer to review it.
If we can help you in liquidating your personal or real property, or just need to talk to someone, please call us at 252-257-4822.